Due to the limited operational range, the average duration of a representative office is 2 years

In such a configuration, the representative office cannot sign contracts or bill customers. However, this form of implementation allows foreign companies to perform marketing and research activities in order to see if China is a viable option. Due to the limited operational range, the average duration of a liaison office is 2 years.

Keypoints

Low establishment cost without minimal share capital required

Cannot receive payments from Chinese clients

Low taxation. Based on expenses

Cannot transfer a representative office to a WFOE

What Are the Conditions?

A Chief Representative must be assigned from the parent company as the responsible party for the operations.

On a monthly or quarterly basis, the representative office is subject to a 10% of taxation on its expenses.

Representative offices can only be located in “Grade A” buildings or buildings mandated by the government.